GTA housing market is healthy despite tighter mortgage standardsAccording to the recent report by the Toronto Real Estate Board (TREB), September sales of existing homes in the Greater Toronto Area fell by 21% from September 2011. Meanwhile, the average price rose by 8.5%.Many economists believe that stricter mortgage insurance rules can be the main reason for such a decline. Nevertheless, TREB says the decrease is actually smaller, as there were fewer working days last month than in September 2011.The number of detached homes sold in Toronto downtownarea was down by 27% from a year ago, and the prices were up by 10%. In addition to it, condo sales in this region fell by 29% with prices going up by 8%.It should be noted that TREB’s report is based on the MLS system transactions, so it shows mainly resale of existing homes and doesn’t include new construction.

Until variable rate discounts will come back into P-0.5% or lower there is no point even to consider variable rate mortgage for the majority of today’s borrowers. Especially when we have sizzling hot deals on 3 and 5 years fixed rate mortgages!

How do you like 2.94% for 5 years fixed rate? Not low enough? You can choose 2.69% for 3 years fixed – which is lower than most variable offers today, but guaranteed not to increase for next 3 years! So today’s choice for most people applying for a mortgage is 3 or 5 years fixed.

Let’s compare and analyze those 2 great offers.

Assumptions:

• 3 Year rate of 2.69% vs. 5 Year rate of 2.94%.

• $250,000 mortgage amount with monthly payment at a 25 year amortization.

• Calculations compare the results at the end of the 3rd year between a 3 year fixed term vs. a 5 year fixed term mortgage.